New Delhi – India and Indonesia, Asia's largest democracies, agreed Wednesday to forge closer defense and economic ties and cooperate in fighting terrorism, Indonesia's president said.

With the two countries' two-way trade nearly tripling in the past four years, Indonesian President Susilo Bambang Yudhoyono told an Indian business leaders' meeting that it was time to expand trade and investment, technological cooperation and cultural ties.

"We agreed on a new strategic partnership which calls for closer diplomatic consultations, stronger defense relations and enhanced economic ties, especially in trade and investment," Yudhoyono said after meeting in New Delhi with Indian Prime Minister Manmohan Singh.

Singh and Yudhoyono pledged to establish a strategic partnership between Asia's largest democracies to promote peace and stability in the continent.

The two countries, which both face threats from terrorism, also agreed to coordinate their efforts at countering terror through frequent consultations.

During his three-day visit to India, Yudhoyono also met with President A.P.J. Abdul Kalam, Commerce Minister Kamal Nath and Defense Minister Pranab Mukherjee.

Trade between the two countries has risen to US$3.5 billion in 2004 from US$1.4 billion in 2000, the Indonesian president said.

Indonesia's main exports to India were palm oil, coal, paper, timber, and some agricultural commodities, while its top imports from India were engineering goods, information technology and agricultural products, Yudhoyono said.

"We expect an economic growth of around 5.7% to 5.8% this year," Yudhoyono said. "The time to invest in Indonesia is now."

Commerce Minister Nath said there is an urgent need to diversify and expand the two countries' trade. "Indonesia is India's second-largest export market in ASEAN (the Association of Southeast Asian Nations), and one of our leading export destinations among developing countries," Nath said. "Indonesia is our bridge to ASEAN."

Indian companies have invested more than US$2 billion in Indonesia, Nath said at the business leaders' meeting.

Yudhoyono said Indonesia has been successfully battling terrorism and has overcome the disastrous effects of the Dec. 26 earthquake and tsunami. The Indonesian president was to leave for Pakistan on Thursday.